Google Prepping to Launch YouTube Video on Demand Service with Blessing of Major Studios?

YouTube may soon be launching a larger video-on-demand rental service as the company has finally secured deals with major studios, including Sony, Warner, Universal, Lionsgate, and a few smaller studios. The company has yet to release pricing information nor the specs for streaming videos and image quality, but the service will most likely compete with Apple’s iTunes service, which currently allows users to either purchase movies and videos or rent them a la carte.

If the service launches, Google will most likely look into integrating it with Android. Currently, a YouTube application already comes preloaded on most Android devices, which allows Android smartphone and tablet owners to view free user-generated content. However, Android currently lacks the multimedia ecosystem that iOS users have enjoyed with iTunes–Google doesn’t yet have a native movies, videos, nor music store although the company had recently begun to integrate Google Books purchases with the Android Market app store for Android 3.0 Honeycomb devices like the Xoom.

A video-on-demand service would make sense given the usage pattern for most people. First, videos are typically not re-watched. Second, a streaming service would mitigate storage capacity limitations on devices as mobile broadband access speeds are becoming increasingly faster. Also, WiFi is also being more accessible in most areas in the U.S.

Over a year ago, YouTube had dabbled in the video rental space with some independent flicks. The move to include major studio productions into YouTube’s rental library will help the company monetize and create synergies between its video service and other divisions, like Android.

Currently, to allow users to rent and watch videos, Android smartphone and tablet manufacturers have to resort to third-party ecosystems or create their own content store. Samsung is creating its own digital hub while HTC is looking to do the same due to the lack of a native official solution from Google. While this will help users who may want to grab a quick flick on the go, it does create fragmentation as different companies use different DRMs and ties up the users to that particular ecosystem. For instance, a Samsung-purchased movie would not work on an LG device so if a user builds a library, they’ll less likely be inclined to switch manufacturers in the future. Other options include partnerships, like those through Blockbuster.